Pound reverses gains as wage growth falls - but unemployment in the UK reaches lowest level since 1975

Jasper Jolly
Follow Jasper
Stormy Weather To Hit The UK
Employment has risen steadily since the financial crisis (Source: Getty)

The rate of unemployed people in the UK has fallen to its joint lowest level since 1975 as the rate of people in employment in the UK stayed at record highs in the three months to January.

Unemployment fell to a four-decade low of 4.7 per cent of the work force, down from 5.1 per cent a year earlier, according to the Office for National Statistics (ONS).

However, the pound reversed gains it made in early trading, dipping below $1.22 in response to the release, which also showed wage growth falling to its lowest since April last year.

Read more: Record-breaking employment numbers threatened by government short-termism

‚ÄčNominal average weekly earnings for British employees grew by 2.2 per cent including bonuses in January 2017, the ONS said, just above the consumer price inflation rate of 1.8 per cent.

Inflation-adjusted real earnings increased by 0.7 per cent year-on-year, giving the weakest growth in real earnings since November 2014, the ONS said.

The rate of working-age adults in employment stayed at 74.6 per cent, the highest level on record first reached last month.

Michael Martins, an economist at the Institute of Directors, said: “This trend of employment-heavy growth looks likely to continue, at least in the short term, with high numbers of job vacancies. Much of the employment growth came in full-time employment, again highlighting the confidence underpinning the UK’s economic outlook."

The unemployment rate has stayed at 11-year lows of 4.8 per cent for the last four months. However, the government’s Budget watchdog, the Office for Budget Responsibility (OBR), forecasts unemployment will rise to peak at 5.2 per cent in 2019 before falling again.

The OBR forecasts employment will rise steadily every year to reach 32.5m in 2021.

The proportion of adults in the labour force has risen gradually as more women enter official work and the effects of the financial crisis slowly fade.

The ONS said the data show "a marked improvement in the matching efficiency of jobs to workers since the downturn".

Read more: We should roll back the barriers to growth – not employment rights

Related articles